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Whales Do Not Swim in the Desert

Game neuroeconomist Ramin Shokrizade explains that F2P metrics have been greatly misunderstood, creating a false stereotype of what a "whale" actually is. The result is going to be an unprecedented industry-wide correction.


For the last two years I have lived in the gaming oasis that is, building monetization models for games such as World of Tanks: Blitz and World of Warships. The focus on all the products I worked on was to aim at maximizing life time value (LTV) by focusing on creating and charging for products that will keep the interest of consumers for at least a month and preferably a year or more. The success of this company comes from building products that generate customer loyalty and continue to meet their needs for long durations.


When I stepped out of the oasis I found myself in a desert where the vast majority of the industry had moved to a “smaller, faster, flashier, more aggressive” strategy of game development. What makes them think this is a winning strategy?


These Are Not the Whales You Are Looking For


By now it is common knowledge that for games outside the oasis (I can't talk about the numbers inside the oasis, other than to say they are VERY different) the consumer conversion rejection rate (100% - conversion rate = consumer conversion rejection rate) is about 99%. In my world, that is a 99% failure rate, and not something I would feel proud about on my resume.


There seems to be this idea that whales are gullible and impulsive people who can't help themselves when it comes to spending. There is also this idea that if you can get a player to spend that first dollar, they are much more likely to keep spending. If either of these two concepts were ever true, they are not true now. Let me drop a few statistics that will explain why the industry standard is a 99% failure rate.


[Disclaimer: These numbers are different than they were two years ago, and will be different next year. If things continue in the desert the way they have been, the trend will stay true]


52% of spenders spend once in a product and then don't spend again. This means that once a player spends, they are unlikely to spend again.


Whales take, on average, 18 days to make their first spend. “Dolphins” take 12 days. Minnows take 8 days. This suggests that big budget players are not impulsive at all. They are very careful and deliberate about where they park their brains and their budgets. Children do often spend impulsively, and a lot of games have been aiming at getting children to impulse spend. All the forces (parents, platform holders, regulators, etc) that could check that strategy are currently mobilizing in force to make this harder for you, so if tricking children into spending is your strategy, it's not one that is going to have much more success.


52% of gamers are women.


While not a “statistic”, I should add that middle aged players have the largest gaming budgets, and probably the least amount of time available for play.


So ask yourself a few questions about your last or current project. Is it gender neutral, or is it likely to appeal to only one gender? What age range is it aimed at? Do you try to monetize your players within the first couple hours of play? Is most of your game content experienced before day 16 (let's assume 30 hours) of play?


Chances are, no matter how large and expensive your business intelligence unit is, or how many EEDAR reports you have read, you are probably on the wrong end of some or all of these questions.


Why is that? I think it is time for a public dialogue on this.


Whales Do Not Swim in the Desert


I've interviewed some two dozen companies in the last three months. Here are some examples of dialogue that generally ended the interviews:


Company: “What numbers would you change in our current product to make it commercially successful?”


Ramin: “Your product is not designed to meet the needs of consumers, and especially whales. It has nothing to do with the numbers in your product.”


Company: “Okay...but what one thing would you do to improve our current product?”


Ramin: “Make it gender neutral.”


Company: “Thank you very much for your time.” [TYVMFYT]


Next example, two months into negotiations:


Ramin: “Okay here is a sample model that I think would work well with your product.”


Company: “Wait, there is almost nothing to spend on in the first 50 hours?!?!”


Ramin: “Yes.”


Company: “That will never fly. TYVMFYT”


And probably the most common question:


Company: “Can you give us numbers from the oasis to prove we should switch to using your models?”


Ramin: “No.”


Company: “TYVMFYT”


You don't have to leave the desert to get the numbers you should be looking at. They are out there. One of the biggest problems in this age of information is information overload. All the information you could possibly need is out there in the public space, and it is free. The reason you hire an expert is to let them determine which numbers have meaning to you, and why. This is why hiring an expert is a lot cheaper than hiring an amateur.


Trying to force a square peg into a circular hole is not smart strategy. Trying to talk to a cat in English is a process with a 99% failure rate. Trying to drag a whale into the desert to make them spend is an approach with a 99% failure rate.


So why not build an oasis for your whales? What is so alien or terrifying about this concept?


Content: Build it and They Will Come


It used to be that game developers made content for the enjoyment of consumers. Companies competed to produce the most grand content. Games like Everquest, EVE Online, and World of Warcraft proved that there was tremendous demand for online gaming, and games with huge amounts of content that consumers could swim in.


The problem was that right about the time the whales were primed to spend, these games provided nothing for them to spend on. So third party agents (“gold farmers”) came in and offered services to the whales. These services often degraded the game environment for everyone, and poisoned the waters. Many large content games failed catastrophically in this environment, and even the three titles I mention specifically here did a very poor job of capturing revenue. They just were not designed to do so.


Some developers went through the painful process of attempting to convert their subscription games to F2P games by reducing the quality of existing content to force non-payers to spend.


Pay to win or “fun pain” mechanisms commonly used in today's F2P games rely on threat generation to force spending. The problem with threat generation is that it interferes with the consumer's ability to build attachment to a game. This sort of attachment is necessary before that 99% is going to open up their purses. You won't find any of this sort of threat generation in the oasis. This not accidental. The desert is threatening, it has earned that reputation.


So what is the solution? Build content that meets the needs of your consumers. Link it with a F2P monetization model that does not rely on threat generation. It's that simple.


Permitting social interaction is also key, because a player is much more likely to log back in if they know people are expecting them. PvP, unless very carefully balanced (not easy, and generally time consuming), is more often anti-social, not social.


Does your game have 300+ hours of progression content? By progression content I mean the player is advancing through levels or tiers or such during this time. When World of Warcraft came out I ran out of progression content in 160 hours. Current F2P leaders in the desert have way more than 300 hours of progression content. It may be lower quality content than that offered in WoW, but at least the player does not feel like they have hit “an end”.


Games in the oasis have 300+ hours of progression content. All of them. I prefer to aim for closer to 1500 on my AAA F2P titles. Why? If you are a whale, and after a 100 hours in you decide to throw down $100. Or $1000. If you know that you are going to be advancing for another 1400 hours, then you will get good use out of your investment. If the game gets boring at the 150 hour marker, why would you throw down money at hour 100?


Note that progression content and content are not the same thing. Clever game design can turn 100 or even 50 hours of content into hundreds of hours of progression content by finding creative ways to loop that content that do not feel repetitious to the consumer. None of the highly successful games I have worked on had particularly large budgets.


Leave the Desert


With current estimates indicating 500,000 new mobile products reaching consumers yearly, the desert is really becoming an apocalypse where your product is most likely to die unnoticed by the general public, unless you spend massively on marketing. Often, several times what you spent on development. Conventional marketing not cutting it? Break out Mariah Carey (as Machine Zone did recently).


Or, you could follow my advice and leave the desert. Sure there will be all sorts of challengers, trying to stop your heroic caravan from ever reaching the oasis. Most of them will be in your own company. Right now there are perhaps two companies in the oasis. The same ones I discussed in my 2012 Supremacy Goods paper. They are still here, as predicted. There is plenty of room for competition.


It won't be cheap. It won't be fast. But whales talk to each other. Once you build it they will come. Whales will bring in other whales, without the need for Mariah Carey. You just have to meet the needs of whales, for a lot more than 16 days. Plan for between 300 and 1500 hours. Obviously you can't do that by approaching games like you would movies that only provide 2 hours of content. And don't fire your game designers, as one major company did last week, unless you are resigned to the apocalypse.

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